Technical analysis for FTSE 100 for 17th October 2024
The UK's main stock indexes jumped on Wednesday after a key inflation reading showed British inflation fell more than expected, boosting the case for a rate cut by the Bank of England.
The blue-chip FTSE 100 jumped almost 1% to close at a near four-week high, while the mid-cap FTSE 250 index climbed 0.9% to touch a two-week closing high.
Precious metal miners led sectoral gains, rising 3.3%, while the rate-sensitive real estate sector added 3%.
Consumer price index data showed British inflation fell more than expected to an annual rate of 1.7% in September from 2.2% in August. A Reuters poll had expected CPI to drop to 1.9%. The pound fell 0.6% to the dollar, another tailwind for British equities.
Investors currently see about a 90% chance the Bank of England will cut rates at its next meeting on Nov. 7.
Asia & Overnight
Asian shares gave back early gains on Thursday as a housing policy briefing in China underwhelmed investors, while the dollar stood near 2-1/2 month highs on the prospect of a Donald Trump presidency.
Global bonds were firm following a surprisingly large drop in British inflation and as the European Central Bank is expected to make its first back-to-back rate cut in 13 years.
Results at chipmaking giant TSMC will be in focus, after a soft outlook from equipment supplier ASML that battered chip stocks.
Japan's Nikkei slipped 0.6% and falling property shares in China unwound the broader market's early-morning gains. The Shanghai Composite was flat and Hong Kong's Hang Seng dialled back a 2% gain to trade 0.6% higher at 0325 GMT.
China's CSI300 real estate index shed 5% to hand back two days of gains.
Foreign exchange markets, meanwhile, have sent the dollar higher tracking an improvement in Republican Donald Trump's fortunes in prediction markets for the U.S. presidential race. Trump's tariff, tax and immigration policies are seen as inflationary, and thus negative for bonds and positive for the dollar. The euro was at $1.0862 and pinned near its lowest since early August. The yen traded at 149.40 per dollar.
U.S. retail sales data is due later on Thursday. Data on Wednesday showed that British inflation slowed sharply to an annualised 1.7%, bolstering bets that the Bank of England could cut rates twice before Christmas.
In commodity trade, Brent crude futures steadied at $74.57 a barrel after four sessions of losses. Industry data showed an unexpected drop in U.S. crude stockpiles last week.
FTSE 100 technical analysis for today, 17th October 2024
A good fight back from the bulls yesterday after the CPI news, with a test of the 8350 level at the end of the session. For today it looks like we might well see another push up, with the 8395 area in the bulls sights. There are a few resistance levels here including R1 and as such I would like to see some (a) profit taking and (b) bear attack at this level.
If that played out then a dip down to the 8315 daily pivot would fit very well for another push up later as the US comes online - the S&P500 needs to break the 2h resistance at the 5855 level so again we could see a rise and dip play out on that.
For the FTSE100, above the 8395 level then the 8438 R2 level is next up and also keep an eye on the 8459 daily resistance level. That said, both the Raff channel tops are at the 8395 level for today so I do think the first test of this level will get a reaction.
Support wise, if the bears were to break below the daily pivot at the 8315 level then 8290 is next up for a test of the 30m 200ema. However, the 2h chart is bullish once again after yesterday's strength, and the Hull MA support is at 8310. Should we therefore see this area I do think it will hold.
The bulls will certainly be keen to keep the momentum going and keep it rising today.
On the news front today the main ones will be at 1330 as we have a few USA data elements released then including initial jobless claims and retail sales. As such expect a bit of volatility then. Forecasts are all fairly positive so could set up a buy the rumour sell the news pattern.
Generally therefore looking for a bit more upside. Breaking the 8330 level is positive for the bulls and they will be keen to capitalise on that today and tomorrow. especially with inflation down, and possibly retail sales news tomorrow being released, and more likely to show a bit of a slowing.
Good luck today.
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